Farm406

13 farm406 and by 17% relative to the previous three-year average. This suggests that producers respond to market signals and attempt to rebound through increased production. Another indicator of acreage planting and allocation decisions that is becoming particularly important for northern Great Plains farmers is the relative ratio of pulse crop prices to wheat prices. Most recent price data from northeastern Montana and northwestern North Dakota show that the current ratios of dry peas and lentils to spring wheat price (hundredweight pulse price per bushel 14% protein spring wheat price) are 1.53 and 3.57, respectively. This is 28% lower than the ten-year average for peas and 41% lower for lentils. If market conditions next spring remain similar to today, then there would be a higher incentive for farmers to allocate land to spring wheat, and an acreage shift to wheat is likely. The last aspect to consider is the extent of possible competition from Canadian producers. While Canadian farmers have continually shifted acreage away from small grains and to pulse and oilseed crops, the 2017/18 spring wheat marketing year may incent those producers to consider allocating a larger portion of their land to spring wheat. Because the Canadian currency has remained fairly competitive relative to the U.S. dollar, monitoring Canadian production, currency exchange values, and possibly trade and geopolitical relationships would provide important insights about U.S. farmers' competitiveness on the global market. "Dr. Anton Bekkerman is an Associate Professor of Economics at Montana State University and a frequent contributor to AgEconMT.com." ROTH IRAS HAVE ADVANTAGES IN LOW INCOME YEARS Joel Schumacher AFC ® MSU Extension, Associate Specialist The 2017 year is shaping up to be financially challenging for many Montana agricultural producers. Drought has hit many producers hard in northcentral and northeastern Montana. Other parts of the state are also dealing with a relatively dry year. Montana's "cash receipts" from agriculture peaked in 2014 and declined substantially in 2015 and 2016. The 2017 forecasts are predicting a modest decline over 2016. A low income year can change some financial decisions, such as the choice between a Traditional IRA and a Roth IRA. Agricultural producers often have income that varies year to year. The tax code has some options that allow variable income to be balanced from year to year. A producer may also adjust the timing of sales and expenses to manage income variability. Even utilizing these tools, taxable income will vary. Both the Montana and federal income tax systems are progressive, meaning that as taxable income increases the marginal tax rate increases as well. At the federal level, income tax rates start at 10% and move up to 15%, 25% and eventually to nearly 40%. Montana has a similar structure, with rates starting at 1% and rising to 6.9%. However, the top rate is reached at a relatively low income level so many will pay the same rate (6.9%) even as income varies. It is important to note that income tax rates are marginal so, only the dollars above a particular income level are taxed at the higher farm finance

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